Wanxiang Group Co., China’s biggest auto-parts maker, agreed to buy most of electric car battery maker A123 Systems Inc. (AONEQ) for $256.6 million, outbidding Johnson Controls Inc. (JCI) in a U.S. bankruptcy auction.
The agreement is for assets including A123’s automotive, grid and commercial business, though it excludes the Waltham, Massachusetts-based company’s military contracts, A123 said in a statement yesterday.
Wanxiang is seeking A123’s battery technology, used in Fisker Automotive Inc.’s Karma sedan, as China pushes its companies to develop electric vehicles. An earlier accord with the Chinese company was scrapped in October, when A123 said it filed for bankruptcy protection and agreed to sell its automotive assets to Johnson Controls.
Waltham, Mass.-based A123 (Nasdaq: AONE) has a contract to install a grid battery system for Maui Electric Co., a subsidiary of Hawaiian Electric Industries Inc. (NYSE: HE) subsidiary Hawaiian Electric Co., at the utility’s Wailea Substation as part of the Maui Smart Grid Project.
The company also has a contract to supply an 11-megawatt grid battery system for the Auwahi Wind project that Sempra Energy (NYSE: SRE) is building at Ulupalakua Ranch on Maui.
“The work you’re doing will help power the American economy for years to come.”
-- President Obama in a Sept. 13, 2010 phone call to battery maker A123 Systems, congratulating the firm on using the bulk of a $249 million government grant to open new facilities in Michigan.
President Obama travels to Detroit today to talk about the need for increased taxes on top earners to finance federal spending, and is using an announcement of a $100 million investment from German auto giant Daimler to illustrate that his economic prescription is working.
Obama is not likely to discuss another big business story of the day – the sale of the assets of battery maker A123 to a Chinese competitor. A123 spent at least $132 million of its $249 million stimulus package grant to build two Detroit-area factories, including one in Livonia, right next door to Redford Township, where Obama is speaking today.
Assuming a bankruptcy judge and the Obama Treasury Department approve of the sale of A123’s assets to Wanxiang Group, the Chinese battery maker would immediately become the dominant force in the industry.
So for $256.6 million, the Chinese firm would get all that the stimulus package purchased plus the company’s existing operations in Massachusetts and Missouri and have the chance to pare down the company to profitability without the overhead of A123’s debt.
Plus, it gets even better!
An additional irony: Whatever share of the original $249 million stimulus grant that the Treasury borrowed from China will still have to be paid back.
A quarter billion dollars given to them for free and two years later they’re in bankruptcy? Holy shit. Better get A123’s top management working for the government ASAP - those guys are even more on the ball than Turbo Tax Timmy!
Wanxiang’s winning bid came only one day after the Canadian government approved a controversial deal allowing China’s state-owned oil company CNOOC (0883.HK) to buy energy company Nexen Inc (NXY.TO) for $15.1 billion.
Hmm. China owns the oil, the gas, the solar, the batteries, the steel, the nickel, the heavy metals, ...
Don’t fret Drew, by the time they launch that EMP attack we will be dead and buried,I hope.